Getting Liquidhttps://gettingliquid.com
Ben BlackSun, 09 Apr 2017 22:13:03 +0000enhourly1http://wordpress.com/https://secure.gravatar.com/blavatar/7e1b9c7d247edf5db41a9850f07a434f?s=96&d=https%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.pngGetting Liquidhttps://gettingliquid.com
A Danger in Stock Option Agreementshttps://gettingliquid.com/2016/06/14/a-danger-in-stock-option-agreements/
https://gettingliquid.com/2016/06/14/a-danger-in-stock-option-agreements/#respondTue, 14 Jun 2016 22:35:10 +0000http://gettingliquid.com/?p=262]]>When an employee accepts a new and exciting job opportunity, she usually is not worrying about whether a new employer can take her vested stock options back. Unfortunately, however, we are seeing more and more technology company employees discover that their employer can reduce or even eliminate the value of their options.

How? By exercising a company’s Right of Repurchase.

Typically, a company has no right to force a departing employee to sell stock back to the company, unless the employee first chooses to sell the stock to a third party (the so called “Right of First Refusal” or “ROFR”). The Right of First Refusal is ubiquitous. It simply allows the company to match the price a third party is willing to pay for the employee’s stock. While one can argue about the equity of the ROFR, the employee still elects to sell of her own free will.

By contrast, a repurchase right says that, when an employee leaves a company, the company can simply purchase the employee’s stock even if the employee doesn’t want to sell the stock. So, let’s say a founding team member vests a large option grant over four years before being terminated. Upon termination, the company can simply repurchase the stock. All opportunity for future upside is lost.

To make matters worse, the forced sale purchase price is skewed highly in the company’s (and venture investor’s) favor. Usually, the price at which an employee is compelled to sell is the “Fair Market Value” at the date of termination. Most people refer to the FMV as the 409A price, which is the price at which the company is granting new options.

Everyone knows that the 409A price is a fiction – it is kept artificially low to entice new employees to join a company and often is a fraction what the shares would garner in an open market. Therefore, at best, the employee is forced to sell at a significantly below market price, in addition to losing the upside. So, if an employee exercised shares at $1.00 a share and is forced to sell at an FMV of $2.00 a share, but the stock is worth $5.00 a share in the open market, the employee loses out on $3.00 a share at the time of sale, in addition to the future upside.

In the most egregious cases, the repurchase price is the same as the employee’s purchase price. Think about that for a second. An employee can work for years to earn inexpensive stock options. Often, stock options are the only good economic reason to work in a startup. Then, when the employee is terminated or chooses to leave, the company can force the employee to sell the stock at the same price that the employee paid. So, the employee receives absolutely nothing for her service.

I am not making this up. In a widely reported case a few years ago, Skype had just this term in its option agreements, which was used against senior executives in the Microsoft acquisition.

Companies that insert repurchase rights into their option agreements may not want potential employees to know they are there, of course. These provisions may be stuffed into boilerplate that a prospective employee can barely understand and hidden with misleading titles.

Below is an actual repurchase right from a stock option grant for a well known, high profile venture-backed business. Note how the paragraph is titled “Private Company,” whatever that is supposed to mean?

Last year, we saw a repurchase right described in the paragraph title as a “Limited Call Right.” Of course, there was nothing “limited” about the right. An employee will have to look carefully for these provisions.

Not content with the basic unfairness of forcing an employee to sell stock they don’t want to sell, the companies may further rig in game in their favor by giving the company a long time to decide. Often, a company will have a year to decide if they want to buy the stock back. During that time, an employee better not go work with a competitor or make the company mad. If they do, the company can easily retaliate by forcing a below market sale of the employees’ stock. One could make an argument that these provisions amount to an “end run” around California’s prohibition on non-compete clauses.

My advice to all prospective employees: ask in an email whether a company that they are considering joining has a repurchase right in their option agreement. If they do, go work somewhere else.

There is a war for talent in Silicon Valley. Talented employees need to vote with their feet if these provisions spread through the ecosystem.

]]>https://gettingliquid.com/2016/06/14/a-danger-in-stock-option-agreements/feed/0akkadianventuresScreen Shot 2016-06-13 at 1.26.56 PM-1So You Want to Raise a Fund? 6 Lessons in Fund Formationhttps://gettingliquid.com/2014/10/28/so-you-want-to-raise-a-fund-6-lessons-in-fund-formation/
https://gettingliquid.com/2014/10/28/so-you-want-to-raise-a-fund-6-lessons-in-fund-formation/#commentsTue, 28 Oct 2014 07:00:00 +0000http://gettingliquid.com/?p=244]]>Today marks the end of the beginning of Akkadian Ventures, as we announced our third fund and our first institutionally backed one. Many people don’t know, however, that Akkadian is the second “first time” fund I have started from scratch. (In 2007, Josh Becker and I raised New Cycle Capital, which was an early stage fund focused on Impact Investing, and which generated good returns for our vintage year despite running headlong into the 2008 financial crisis.)

In a town obsessed with entrepreneurs, we forget that starting a fund is as entrepreneurial as starting a company. The universe of people who have started two completely different private equity firms from scratch in the last 8 years is small. So, for all those aspiring fund managers who do not have a billionaire in their pocket – those who have to do it the hard way — here are some lessons I have learned.

Lesson 1: Have a maniacal focus on doing one thing better than anyone else

A smart fund investor once said to me that “most venture capital funds are no more than a few smart guys running around having coffee and talking about all the important people they know.” Do not be one of those guys. With hundreds of new funds formed in the past few years, a fund manager needs to be more than the sum of their network. They need a clear strategy and to own a place in the ecosystem.

A clear and unique focus helps fundraising and business building. Many of the best new funds stand out to investors because they go so deep into one sector or strategy that any entrepreneur in their space simply has to work with them. Some of my favorite examples of new firms include:

Forerunner Ventures – Next Generation Commerce

CrossCut Ventures – Southern California Seed Stage

Structure Capital – Businesses that utilize excess capacity

Amplify Partners – Amazing depth in core IT Infrastructure

At Akkadian, we are completely focused on using proprietary data to generate unique and differentiated secondary investments. That is all we do.

Lesson 2: It’s the quality, not the size, of your track record that matters

In 2011, Akkadian did a series of very small transactions ranging $150K to $1.1M in seven companies for a total of about $5M. I raised the money on a “deal by deal basis”, which was challenging and humbling. However, while most of the industry was chasing auctions of secondaries in a few brand-name companies, we developed proprietary techniques that enabled us to find great companies under the radar. Two of those companies have already gone public (Splunk & Opower). We returned the 2011 fund in less than 2 years and the 2012 fund is well on its way. Now with seven exits out of twenty positions since inception, our track record is solid.

When fundraising, nobody cared that our initial investments were small. They cared about how we sourced them and the thought process that drove the investment decision.

Lesson 3: Get out of Silicon Valley

Most investors in the Bay Area are significantly overweight in venture capital. However, it turns out that the rest of the world is pretty interested in venture capital but has much less exposure. In 2011 and 2012, we found a majority of our early money pitching individual investors — not institutions — outside the Bay Area. Some markets were more fruitful than others.

For those of you pitching individuals outside of the Valley, I have some general light-hearted suggestions on what to expect.

Los Angeles: Fund investors in LA seem more concerned than investors in other cities about who else is in the deal. It’s important to understand the social dynamics you are walking into. A particular investor in your fund can either bring a whole bunch of other investors or turn off other investors. Understand your LA investor before you meet.

New York: New York investors do not care who you are. And do not bother telling them about how you are changing the world. They just want to know how you are going to make them money, and the more unfair your competitive advantage, the better.

Texas: Texas is an underestimated market for venture. Texas investors are the most fun people to pitch in the country, in my opinion. They love a calculated risk. After all, drilling for oil is not that far off from doing a startup. You either hit it or you don’t. They care about working with people they like. If a good friend introduces you in the right way, you will make friends (and investors) for life in Texas.

Boston: In Boston, experience and background really count. I had more questions about my background than anywhere else. Who did I work for in the past? Why would I go out on my own when I could work for such a great established firm? Where did I go to school? What did I study? I did not usually get these questions elsewhere.

Go outside of the Bay Area, but adjust your pitch and networking approach to each location.

Lesson 4: Find the right investment partners

Raising my first $5M for a theoretical strategy was difficult and humbling. Raising the next $30M got easier once we had some results, but it still an uphill climb. But once I brought on Mike Gridley, who has been in the secondary industry much longer than I had, my life became immensely easier and more fun.

Business is a team sport. Build a team you love, even if it means less profit and control for yourself. Now that Pete, Mike and I have added Rob Bailey too — one of the highest energy and well-connected executives around — we have massive firepower for a small focused fund.

Lesson 5: Ask this one question before your pitch

Remember that each investor will analyze a venture strategy through their own lens and investment philosophy. To find out how an investor thinks, I would ask each potential investor before my presentation to tell me about their favorite recent investment. That one question told me whether that investor was more interested in risk mitigation or profit maximization. I could then tailor my pitch accordingly on the fly.

Lesson 6: Stay small, even when you can finally go large

The returns on our first two funds are looking good. We could have raised a lot more money than we did. We view an oversubscribed fund as a high-class problem. Few people realize, however, that fund size and fund returns are often inversely correlated. Despite this fact, every year, many talented investors continue to raise huge funds early in their development.

With a small fund comes discipline. I believe that a small core fund, with the ability to invest larger through co-investments, will result in better returns and a stronger alignment of interests. I would not want to manage a $200M+ fund in this space unless I had at least a decade to build up that kind of capacity. The bigger the transaction, the more competitive and efficient the market. I like our fund size just the way it is.

In conclusion, raising a first time fund is certainly challenging but its doable. Be scrappy. Be creative. Have a crystal clear fund strategy. Do not worry about what other people are doing. Execute.

]]>https://gettingliquid.com/2014/10/28/so-you-want-to-raise-a-fund-6-lessons-in-fund-formation/feed/1akkadianventuresThe One Thing to Ask for When Leaving a Start-Uphttps://gettingliquid.com/2014/03/04/the-one-thing-to-ask-for-when-leaving-a-start-up/
https://gettingliquid.com/2014/03/04/the-one-thing-to-ask-for-when-leaving-a-start-up/#commentsTue, 04 Mar 2014 22:06:54 +0000http://gettingliquid.com/?p=239]]>From my position as a late stage provider of employee liquidity, I often see what works and what doesn’t when it comes making money at start-ups. After looking at hundreds of individual situations, I would like offer one piece of advice to departing executives. The absolute best thing you can ask for when leaving a company is a long option exercise period.

Why is a long option exercise period so important?

When an employee leaves a business, usually the company informs the employee that they have 90 days to exercise their options. Even for early stage companies, the employee usually must come up with thousands of after-tax dollars to exercise their options and pay any tax that is due at the time of exercise.

As we all know, the large majority of all start-ups fail. Let’s assume, for sake of argument, that 99 out of 100 start-ups will fail in ten years and 1 will have an exit greater than $100M. If an employee has options on 1% of a company, the expected value of the options in any particular company is 1% * 1% * $100M or $10,000.

Therefore, at the time of exercise, there is a very low probability of an exit that is substantial enough to warrant putting after-tax cash at risk. Obviously, there are many factors that go into the precise value of the option, but when these odds are considered, it’s no wonder that many options are simply left on the table. And, I would argue, that people who exercise stock in any individual start-up in year one or two are probably making a bad bet with their hard-earned capital.

The best way to deal with poor odds that an individual start-up will probably fail, but may succeed in a big way, is to have a long time to watch before an employee must put cash at risk. That is where the long option exercise period comes in. Let’s say hypothetically an employee has 10 years to exercise their options, and all companies either succeed or fail in 10 years. In that circumstance, the employee will never lose their money. Rather, they will wait until company success is clear.

The other advantage is that giving an employee a long option period doesn’t really cost the company much. Sure, the company must wait to obtain the exercise price, but at an early stage, this amount of money is nominal. Usually, a long exercise period is a pretty easy ask. Smart entrepreneurs and early employees should always ask for a long exercise period when they move on.

In the last year, I have seen two situations in which long (5 year+) exercise periods have worked to entrepreneur’s advantage to the tune of many millions of dollars. In both circumstances the company took six or seven years to become successful. The original team was able to wait and obtain a substantial payday without putting their cash at risk.

So ask. It can’t hurt, and may be one of the best questions you every asked.

]]>https://gettingliquid.com/2014/03/04/the-one-thing-to-ask-for-when-leaving-a-start-up/feed/137.783163 -122.40769537.783163-122.407695akkadianventuresStop Hating: Bitcoin Needs Both Investors and Criticshttps://gettingliquid.com/2013/12/19/stop-hating-bitcoin-needs-both-investors-and-critics/
https://gettingliquid.com/2013/12/19/stop-hating-bitcoin-needs-both-investors-and-critics/#respondThu, 19 Dec 2013 23:36:42 +0000http://gettingliquid.com/?p=229]]>Bitcoin critics really hate Bitcoin. Today Alex Payne blogged what I am sure he felt was a scathing and effective indictment of Andreessen Horowitz’s investment in Coinbase, which is probably the leading startup focused on the Bitcoin economy. He wrote:

Most charitably, Bitcoin is regarded as a flawed but nonetheless worthwhile experiment, one that has unfortunately attracted outsized attention and investment before correcting any number of glaring security issues.

To those less kind, Bitcoin has become synonymous with everything wrong with Silicon Valley: a marriage of dubious technology and questionable economics wrapped up in a crypto-libertarian political agenda that smacks of nerds-do-it-better paternalism. With its influx of finance mercenaries, the Bitcoin community is a grim illustration of greed running roughshod over meaningful progress.

Far from a “breakthrough”, Bitcoin is viewed by many technologists as an intellectual sinkhole. A person’s sincere interest in Bitcoin is evidence that they are disconnected from the financial problems most people face while lacking a fundamental understanding of the role and function of central banking. The only thing “profound” about Bitcoin is its community’s near-total obliviousness to reality.

Wow. That is harsh.

Of course, Payne is 100% correct. Unfortunately, most of what he says is irrelevant.

One is on solid intellectual ground to claim that Bitcoin is highly likely to fail. And, its true, Bitcoin may have many negative political and societal ramifications. Bitcoin’s critics are right to point out all the reasons why Bitcoin will or should fail. They should pat themselves on the back and nod in collective judgmental agreement at currency pirates run amok.

When it comes to indicting venture capital investment in the Bitcoin ecosystem, however, these critics demonstrate a profound lack of understanding.

That Bitcoin is likely to fail is completely irrelevant to whether VCs should invest in it. Their ire is sadly misplaced.

All that matters, is that Bitcoin might succeed .. and nobody can say with 100% certainty that it won’t.. but if its does, the business opportunity will be immense. Think about this: A16Z invested just 1.9% of its current $1.3B fund in Coinbase. If Coinbase follows Webvan into technology oblivion, the firm and it’s limited partners, will not lose one moment’s sleep over the loss.

On the other hand, if Bitcoin succeeds, Coinbase is well positioned to be the next Mastercard or Visa. Mastercard and Visa today have a combined valuation of $280,000,000,000 in current market capitalization. If A16Z owns 20% of the company, we are talking about a venture capital investment for the ages. The people at A16Z aren’t “grim mercenaries.” There are few opportunities this big out there. The folks at A16Z are rational actors who are just doing their jobs.

The fact that in Bitcoin has security holes or faces a very difficult regulatory environment is also irrelevant. Investors can’t wait until all the technical problems are worked out. Investors can’t wait until the government issues a proper set of regulations. If investors waited, nothing would ever happen. And regardless, someone else will simply beat them to the opportunity. Paypal was illegal and subject to massive security risks when it was launched. Uber also had no regulatory framework in which to operate. Those companies turned out pretty well. Society is adapting to both.

The hand wringing about Bitcoin’s potential negative societal implications is also irrelevant to whether venture capitalists should invest in it. Many of our most profound technological advancements are used for illicit purposes. The Internet itself is probably the greatest tool for stealing, exploiting, degrading and dehumanizing that was ever created. Should VCs not have invested in the Internet because its primary use case is the global dissemination of pornography? Venture capitalist aren’t morally obligated to invest only if they can rule out all negative consequences of a technology.

Luckily, a few hundred years ago, some pretty smart folks invented a system for deciding how to deal with the negative consequences of new technologies. We call it the political process. We call it democracy. It’s messy, but better than all the alternatives.

The more important point is that progress requires all the players to play their roles. We need venture capitalists to invest in nascent, unproven, and difficult to understand technologies like Bitcoin. We need social critics to shed light on the negative societal impact of new technologies so that the political process can manage the inevitable dark side of anything new. It is the confluence of all three actors – investment, knowledge and politics – that will shape the world in a positive way.

]]>https://gettingliquid.com/2013/12/19/stop-hating-bitcoin-needs-both-investors-and-critics/feed/037.783163 -122.40769537.783163-122.407695akkadianventuresWhy Founders Leave Successful Companies: 4 Archetypeshttps://gettingliquid.com/2013/12/17/why-founders-leave-successful-companies-4-archetypes/
https://gettingliquid.com/2013/12/17/why-founders-leave-successful-companies-4-archetypes/#respondTue, 17 Dec 2013 17:54:37 +0000http://gettingliquid.com/?p=226]]>In my line of work, it’s a common occurrence to run into founders who are no longer involved in the successful companies they built. At first glance, a departed founder from a successful company seems like an anathema. After all, venture capital firms these days are each falling over each other to position themselves as “founder friendly.” Given that most founders will only create one company, one might surmise that such founders are loath to depart from their greatest moment in the sun. Nonetheless, I probably find myself chatting with a departed founder of a successful company each week.

The conversation with the departed founder experience is often bittersweet. These departed founders are proud of what they built, but you can often detect a distinct hint of sadness in their voice.

After listening to many of these stories, I have concluded that there are fundamentally four archetypes for the departed founder.

1. The Co-Founder (in name only): When a company starts, there are commonly two or three “founders” but one person may have more control and ownership than the others. The line separating the founding team from the first employee is often unclear. Often there is a main founder, and he or she uses the founder title to acquire free work from friends during a project’s embryonic stage. After all, founders don’t get paid. These “junior” founders rarely seem to last through Series B or C. As a company succeeds, the company attracts investors and talent. The senior founder finds that he can upgrade talent. Then, the junior founders are either shown the door or frustrated with their diminished role.

2. The Wrong Investor: Each “how to” list published by a VC or an entrepreneur contains an exhortation for entrepreneurs to conduct back channel references. Yet, so often, all it takes is a good brand name and the entrepreneur forgets this crucial step in the process. If a company is successful, the wrong kind of early investor can see that they can get more credit if they push the founder out. This rare situation can occur especially when the founder is young and the investor can demand “adult supervision.” This doesn’t happen often, but it happens.

3. The Portfolio Founder: A portfolio founder is one who, from the beginning, is at peace with their exit and knows they will bring in a manager/partner sooner rather than later to play the front man. They see that most of the value is created in the first few years and after that, after product/market fit, the issue is usually execution. Their goal is to get the huge early slug of equity and then let others carry the ball once the idea has found market validation. After a decade or so, these founders have amassed a portfolio of equity positions using other people’s money. As an investor, one has to have some respect for the kind of founder that can pull this off.

4. The Chief Strategy Officer: Its not uncommon for a founder to bring in a CEO to scale revenue towards a significant exit. When this occurs, some founders are kings without a kingdom and are given the title Chief Strategy Officer. Let’s be honest here: there is no such thing as a Chief Strategy Officer. That job is the entrepreneurial equivalent of being the Vice President. The title and role exists to keep the founder tightly by the CEOs side to take on whatever idiosyncratic projects arise. If the founder is a great utility infielder, and checks his ego at the door, the role can work. Often, however, “CSO/Founders” resign eventually and, since the job is not a real job, they are not replaced.

]]>https://gettingliquid.com/2013/12/17/why-founders-leave-successful-companies-4-archetypes/feed/037.783163 -122.40769537.783163-122.407695akkadianventuresAsk these three questions to find out if your company cares about your equityhttps://gettingliquid.com/2013/10/28/ask-these-three-questions-to-find-out-if-your-company-cares-about-your-equity/
https://gettingliquid.com/2013/10/28/ask-these-three-questions-to-find-out-if-your-company-cares-about-your-equity/#commentsMon, 28 Oct 2013 23:29:37 +0000http://gettingliquid.com/?p=219]]>There are two types of companies. One type sees equity as something an entrepreneur earns for making valuable contributions while employed. The other type wants to lure an employee to work day and night, but then hopes that you never actually get your hands on your equity.

If you want to win at the entrepreneurial game, it’s important to ferret out which kind of company you are about to join

Its difficult to tell how supportive a company is about employee equity. However, in my experience, here are the three questions that a prospective employee should ask that can shed some light on a company’s true attitude toward their equity.

1. Ask the company to provide the number of shares outstanding. If your company will not provide you an estimated number of shares outstanding, then they don’t care about your equity. Without the shares outstanding, there is simply no way for you to understand if your options are worth a million dollars or a single dollar. If the company has a billion shares outstanding, your 100,000 shares aren’t worth squat. There is no reasonable justification for withholding this data. If the company resists providing an estimate, then call bullshit: the number of shares authorized is usually available information to the public. Anyone can order the certificate of incorporation from Delaware. If your prospective company won’t tell you, then you should know that there is a fundamental problem.

2. Ask whether the company has ever allowed employees to exercise their options past the 90-day window. Companies typically require employees to exercise their options within 90 days of their departure. Often, the cost of the option exercise and the resultant tax hit is cost prohibitive for the employee. One option (other than getting an option exercise loan from someone like us) is to ask the company to extend the exercise period so that the employee doesn’t have to come up with the money right away. The only negative result of this extension for the employee is that the options no longer qualify as Incentive Stock Options but rather are taxed as Non-Qualified Stock Options. An extension doesn’t really cost the company anything. Many companies routinely grant these extensions. It’s a good sign if they do.

3. Ask whether the company has a repurchase right. In 2011, there was quite a public debate when the press discovered that Skype had the right to repurchase departing employee stock at the grant price. Such a grant makes a company’s stock options effectively worthless because the company can simply buy shares back at the strike price after an employee has exercised the options, leaving the employee with nothing. Unfortunately, we are more of these repurchase rights in stock option agreements. Run screaming from any company that has any flavor of repurchase right. And read your option agreement carefully.

Finally, remember that the best a company will ever treat an employee is the day before they join. If the company gets squirrely when you ask these questions, go find another one.

]]>https://gettingliquid.com/2013/10/28/ask-these-three-questions-to-find-out-if-your-company-cares-about-your-equity/feed/137.783163 -122.40769537.783163-122.407695akkadianventuresWhy I brought on a Co-Founder three years after starting Akkadianhttps://gettingliquid.com/2013/10/10/why-i-brought-on-a-co-founder-three-years-after-starting-akkadian/
https://gettingliquid.com/2013/10/10/why-i-brought-on-a-co-founder-three-years-after-starting-akkadian/#respondThu, 10 Oct 2013 12:21:58 +0000http://gettingliquid.com/?p=208]]>

As the founder and sole investing partner at Akkadian, I have had the honor and responsibility of making the final investment decisions at Akkadian for the past three years. I have also had a great team supporting me in fundraising, sourcing, due diligence, research, valuation and legal, and we’ve done very well with this model.

Today, I am very pleased to share the news that secondary investment pioneer Mike Gridley is joining our team as a Managing Director.

Why have I brought on what amounts to a co-founder three years after I started Akkadian?

Some of my colleagues have expressed surprise that I would bring on a partner this late in the game, after the brutal slog of starting a company from scratch. The horizon of the fund already looks quite bright: we’re invested in 17 companies and have worked with over 60 selling shareholders. Thus far, it appears we have been right far more than we have been wrong. Our investors seem pleased, and we’ve been able to raise plenty of capital without another investing partner, which usually defines how investors think about partners.

But the day that I heard Mike was leaving Industry Ventures, I called him and scheduled a meeting for that week. I offered him an equal partnership in the first five minutes of our meeting.

It was the easiest major decision I have ever made.

I’d like to tell you a bit about how that decision came about.

I first met Mike when I was helping a friend sell a position in a software company five years ago. Mike was a founding team member and managing director at one of the largest secondary firms in Silicon Valley. He ended up beating the competition for that particular investment and getting the deal. I was impressed with how he handled the transaction in a highly professional, transparent manner.

When I started doing my own secondary investments, Mike could have been upset. Instead, he invited me to lunch.

We kept having those lunches every few months. I sent him some deals that were too big for me since we were capital constrained, and we frequently shared insights into the constantly evolving state of the secondary market.

When we had our lunches, I grew to trust him and talked about many of the challenges I faced building this business. I always appreciated his feedback and wise counsel. It became clear, as we discussed business in general, that we shared a similar investment philosophy.

When I was raising our first dedicated “blind pool” fund in 2012, some potential investors doing back-channel due diligence called Mike and asked about Akkadian Ventures. He could have perhaps kept me out of the market merely by saying I was unlikely to succeed. Instead, I heard back the most complimentary comments.

These are the moments in business that build trust.

The decision to bring on an equal partner – essentially a co-founder – several years into a start-up investment firm is not easy, but I think it’s justified for three reasons:

There is deep trust: My interactions with Mike over and over again have convinced me that I can trust him and put my business future in his hands.

We have complementary experience: Mike brings a very different set of venture connections and experience than mine, having worked with the major institutional investors in the secondary market for close to a decade.

We share the same investment philosophy: Mike and I completely agree on what a good opportunity looks like and how to attack the market.

Most importantly, Mike and I both think that financial success is nothing without happiness. Life is too short to care more about ownership than working with people you admire and believe will deliver real value.

The team at Akkadian Ventures is ready to take the firm to the next level, and Mike is absolutely the right person to partner with to help accelerate our growth. I am looking forward of many years of being in the investment trenches with Mike. Welcome to the team!

San Francisco, Calif. October 10,2013 – Akkadian Ventures today announced that Mike Gridley is joining the firm as a Managing Director. Gridley will be Akkadian’s second investing partner and a member of the Investment Committee with co-founder Ben Black.

Mike Gridley is an investing pioneer in the venture capital secondary markets. Gridley was on the founding team of Industry Ventures, where he served as a Managing Director since 2004. Gridley led Industry’s investments in Facebook, Twitter, Pandora, LifeLock, Jajah (Acquired by Telefonica), Cloudmark, Lowercase Capital (Twitter, Uber, Instagram), Walden Venture Capital (Pandora, Glam, SoundHound) and Madrona Ventures (Isilon), among others. He also helped grow Industry Ventures from less than $10 million AUM to over $1 billion AUM. Gridley is a proven technology investor and has deep experience working with companies and entrepreneurs to solve liquidity problems.

“Mike was a great partner and valuable advisor. He brought LifeLock critical additional expertise in helping manage shareholder liquidity and raising capital,” said Todd Davis, Founder and CEO of LifeLock.

Akkadian Founder Benjamin Black explained, “Mike started doing direct secondaries when there were only a handful of firms dedicated exclusively to venture capital secondaries. Now the secondary market is a multi-billion dollar asset class on its own. As a result, Mike is the ideal person to partner with to take Akkadian Ventures to its next level. He brings almost a decade of secondary investment success and has the very rare experience of building an institutional investment firm from the ground up. He will greatly accelerate our development as a firm. We share the same philosophy that small, focused funds, small transactions and flexible structures present the best strategy for producing outsized returns in the direct secondary markets.”

“I am thrilled to be joining Ben at Akkadian,” said Gridley. “I have watched Ben build a very successful firm over the last few years, and I am excited to be a part of the next chapter at Akkadian. As the venture secondary market has matured, Akkadian has been at the forefront of the market with innovative liquidity solutions for companies, employees and investors. Ben understands the unique needs of companies and shareholders required to produce win-win outcomes. I look forward to continuing Akkadian’s investment success and building on its strong reputation among the investor and entrepreneurial community.”

Akkadian focuses exclusively on solving the liquidity issues faced by entrepreneurs, early employees and investors. Knowing that it takes an average of nine years for entrepreneurs to achieve liquidity, Akkadian has created a number of unique ways for entrepreneurs and employees to generate liquidity and diversify their risk by monetizing a portion of their private stock. With a focus on acquiring small stakes in successful, growing companies, Akkadian Ventures helps innovators manage risk and reap financial reward during that long climb to the top. Since 2011, the company has worked closely with the management teams of seventeen companies to implement solutions that appeal to all stakeholders.

About Akkadian Ventures
Akkadian Ventures is a direct secondary investment firm focused on providing liquidity to early employees and investors of venture-backed businesses. Akkadian offers tailored and unique solutions for companies and employees, with key benefits that include speed, tax efficiency and rigorous respect for confidentiality. Akkadian has also developed a proprietary, data-driven methodology to identify which private technology companies are entering hyper-growth and uses this data to “pre-approve” companies for its liquidity programs, dramatically accelerating the time to transaction for entrepreneurs. Founded in 2010, Akkadian is based in San Francisco, Calif. For more information, please visit http://www.akkadianventures.com.